The So-So Year in IPOs

By Sam Mamudi

Dhar told me he sees two reasons for this: First, companies are coming under greater scrutiny ahead of potential IPOs — he won’t name particular stocks, but you can imagine that both the aforementioned Facebook launch and Groupon‘s (GRPN) IPO and subsequent drop may have helped make people more careful.

The other reason, of course, is the uncertain markets. I’ve remarked before that it seems to be an overlooked fact that the Standard & Poor’s 500 index is up 14% this year, but for better or worse companies and investors have felt uneasy, either due to volatility, elections, Europe or now, yes, the fiscal cliff.

It’s not all gloomy, though. As PwC notes, the tougher scrutiny may pay off for investors — the 33 IPOs that priced in the fourth quarter are on average 21% higher than their issue price. What’s more, we’re not doing too badly in the grand scheme of things.

“If you look at it on a relative basis, New York has done much better than Hong Kong or London this year, and we’re seeing the IPO pipeline building,” says Dhar. “And I’ll think we’ll see the healthiest companies come out of the pipeline first.”

Dhar said there are just over 60 IPOs in the pipeline, but the real figure could be higher — this year’s JOBS Act allows companies to keep IPOs under wraps until 21 days before a roadshow. For reference, anything from 50 to 150 companies in the pipeline represents a healthy figure, added Dhar.

As for next year? Who can say. Just today we’ve had mixed signals — consumer spending up, consumer sentiment down — but if market confidence does improve, it seems that there’s a line of ‘good’ IPOs ready to take the plunge.

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Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.